Court: District Court, W.D. Pennsylvania; April 16, 2019; Federal District Court
An auto lender must adhere to state commercial codes and debtor protections during car repossession, which include specific disclosure requirements for repossession and deficiency notices. These laws aim to ensure that the lender's actions are commercially reasonable. The complexity of compliance increases when a vehicle is purchased in one state for a resident of another state, particularly in cases involving a deceased debtor who continues payments until a final default. The court addresses whether the estate of a Pennsylvania debtor, who bought a car in Ohio, can challenge the repossession and deficiency notices under Pennsylvania's Commercial Code and seek conversion for the repossession. While the court identifies disputed factual issues necessitating a trial for some Article 9 challenges, it concludes that a class action cannot be certified due to the predominance of individual issues over common ones and the atypical nature of defenses presented by the debtor's estate. Additionally, the court denies the intervention of eight Pennsylvanians, allowing them to seek remedies if timely. The case background reveals that Rick McDonald, a Pennsylvania citizen, purchased a truck via his mother, Patricia McDonald, from an Ohio dealership without visiting the site, and financed the purchase through Wells Fargo Auto Finance, governed by Ohio law.
Wells Fargo repossessed the GMC Sierra on November 28, 2012, following the death of Patricia McDonald on December 21, 2009. Despite her passing, someone continued making her monthly payments for over two years, and Wells Fargo claims it was misled by Rick McDonald into believing Patricia was still alive. The account defaulted in August 2012, leading to repossession. There is a dispute regarding Patricia's right to reinstate the loan at the time of repossession, although a November 30, 2012 Notice indicated she could reinstate the loan by paying $2,862.75 by December 20, 2012. This Notice also specified a public sale of the vehicle on January 3, 2013, with a minimum bid of $9,157.00. Wells Fargo later issued a "Notice of Continued Sale" on January 4, 2013, stating the vehicle was not sold and scheduling another sale without a lower minimum bid. Wells Fargo sold the GMC Sierra for $3,400 at the January 22, 2013 auction and sent a deficiency Notice on January 27, 2013, indicating a remaining balance of $292.89 after the sale. An attorney representing Patricia posthumously falsely claimed to act on her behalf in requesting an explanation for the sale price and an accounting of the outstanding balance. Liane McDonald indicated that either she or Rick authorized the attorney to communicate with Wells Fargo.
Liane McDonald, as Administratrix of her mother-in-law Patricia McDonald's estate, filed a lawsuit against Wells Fargo in January 2016, alleging violations of Pennsylvania's Commercial Code and the now-repealed Motor Vehicle Sales Finance Act (MVSFA). The Estate sought class action status and amended its complaint to include claims of breach of contract, violations related to defaulted debtors, and conversion due to insufficient notice regarding the repossession and sale of a GMC Sierra. Key allegations included that Wells Fargo's notices did not meet the requirements of the Commercial Code, specifically sections 9610, 9614, and 9616, which mandate commercially reasonable practices and proper notification regarding collateral disposition. The complaints detailed that notices failed to adequately inform borrowers about the sale and redemption process, contained conflicting information, and did not provide necessary contact information for further inquiries.
The court previously dismissed the Estate's Amended Complaint based on the survival action laws of Ohio and Pennsylvania and determined that the claims accrued nearly three years after Patricia McDonald's death. On appeal, the Court of Appeals ruled that Liane McDonald could not pursue claims under Pennsylvania's survival action statute but could under another Pennsylvania statute. Additionally, the court found she could not bring claims under Ohio law, affirming the dismissal of her breach of contract claim while remanding for a choice of law analysis on the remaining claims.
A schedule for trial has been established for the individual or class claims following the Court of Appeals' mandate, and Wells Fargo's renewed motion to dismiss has been denied. Discovery is permitted on the Estate's claim and its class certification efforts. Both parties have filed motions for summary judgment regarding the Estate's claims, with the Estate also seeking class certification. Eight Pennsylvania residents, whose vehicle repossessions are at issue, have filed to intervene, arguing that the Estate's counsel is inadequate to represent their interests in the class action. They challenge Wells Fargo's Notices for not disclosing critical information regarding loan reinstatement and personal property access, as well as questioning the legality of third-party fees and the method of vehicle sales. They seek to intervene to preserve their claims, either by taking over the class action or severing their claims into a new action.
In the analysis, while cross-motions for summary judgment are pending, the Estate's claims under Article 9 and conversion require a jury trial, particularly regarding the reasonableness of Wells Fargo's actions and the consent for repossession. The Estate has not demonstrated the requirements for class certification, including typicality and predominance. Consequently, the intervenors do not have a valid basis for their intervention as their claims mirror those of the Estate. The court will proceed to trial solely on the Estate's claims under section 9610 and conversion. Disputed facts necessitate trial proceedings; however, the Estate's allegations of Wells Fargo's Notice violations under sections 9614 and 9616 do not hold as a matter of law. Conversely, Wells Fargo contends that the Estate's claims are governed by Ohio law and disputes the merits of the claims, arguing that the conversion claim is time-barred and justified by the existing contract.
Pennsylvania law governs the Article 9 claims in this federal court case despite disputes over whether Ohio law should apply based on the Contract. The court, adhering to Pennsylvania's choice-of-law rules, determines that the parties' choice of law provision does not extend to Article 9 claims, as Pennsylvania has a stronger interest in protecting its resident debtors. The Contract specifies that Ohio law applies only to the contract itself, not to all claims arising from the legal relationship. The court interprets this provision as narrow, thus limiting its application to contract interpretation rather than broader claims. While Wells Fargo contends that Article 9 claims are inherently linked to the Contract and should be governed by Ohio law, the Estate argues that these claims represent essential consumer protections that cannot be waived or modified. The Pennsylvania Commercial Code supports the Estate's view, emphasizing that Article 9 rights are fundamental and not merely contractual defaults. Consequently, the court finds that the relevant statutory provisions operate independently, affirming the Estate's position on the applicability of Pennsylvania law.
The Official Comment highlights the legal system's skepticism towards agreements that restrict debtor rights while relieving secured parties of their obligations, particularly in default situations where power dynamics favor secured creditors. It emphasizes the prevention of overreaching by prohibiting modifications or waivers of these protective rules, distinguishing Article 9 provisions as functioning independently from standard contractual obligations, akin to consumer protection laws. The choice of law provision in the Contract does not apply to the Estate's Article 9 claims, which must be assessed under the conflict of laws analysis outlined by the Third Circuit in Hammersmith v. TIG Insur. Co. Pennsylvania has a stronger interest in applying its consumer protection laws to the dispute than Ohio. A real conflict exists between Ohio and Pennsylvania laws, as Ohio does not allow survival actions for McDonald's claims, while Pennsylvania does. This situation is classified as a true conflict, as both states have interests that would be affected by the application of the other's laws. Pennsylvania's interest in safeguarding resident debtors from secured creditor overreaching is significantly compromised by Ohio law, which lacks statutes supporting McDonald's claims. In contrast, Ohio's interest in this matter is questionable, given that the dispute involves a South Dakota citizen and a Pennsylvania citizen over a vehicle located in Pennsylvania. A thorough choice of law analysis indicates that Pennsylvania law should prevail, as its consumer protection provisions are vital for protecting local debtors.
Judge Tucker affirmed that, based on Pennsylvania choice of law principles, class members in consumer protection cases are governed by the laws of their home states. This principle similarly applies to the Estate's claims under Article 9 and the MVSFA. The analysis utilizes §188(2) of the Restatement (Second) of Conflict of Laws, which considers multiple factors:
1. **Place of Contracting**: Initially presumed to favor Ohio, evidence later confirmed that the contract was executed in Pennsylvania, where the vehicle was delivered and documents signed.
2. **Place of Negotiation**: This factor is inconclusive as negotiations occurred over the phone, with Rick McDonald negotiating from Pennsylvania without visiting Ohio.
3. **Place of Performance**: This points to Pennsylvania, as Rick McDonald used the vehicle for work there, with no evidence of usage in Ohio.
4. **Location of Subject Matter**: The vehicle was utilized exclusively in Pennsylvania before repossession.
5. **Domicile and Business Locations**: This also favors Pennsylvania, as the McDonald family resided there, despite Performance GMC being based in Ohio and Wells Fargo being a South Dakota corporation.
Ultimately, the analysis concludes that Pennsylvania law governs the Article 9 claims due to its stronger connections to the case over Ohio’s interests. Wells Fargo's motion for summary judgment on choice of law grounds was denied.
Wells Fargo's pre-sale Notices dated November 30, 2012, and January 4, 2013, comply with Section 9614 of the Pennsylvania Commercial Code regarding pre-disposition notifications in consumer-goods transactions. The Estate contends that the Notices lack certain information required by the Code. However, an analysis reveals that the Notices meet the necessary criteria outlined in Section 9614(1) and incorporate the requirements from 13 Pa.C.S.A. §9613(1).
Specifically, the November 30, 2012 Notice includes all requisite details: it identifies the debtor, Patricia A. McDonald, the secured party, Wells Fargo Bank, N.A. DBA Wells Fargo Dealer Services, and the collateral—2002 GMC Sierra 1GTHK29182E291423. It also specifies the method of disposition (public sale), the date (01/03/13), time (1:00 PM), and location of the sale in Grove City, Ohio. Furthermore, the Notice addresses the debtor's right to request an accounting of unpaid indebtedness, offering contact details for such inquiries, which fulfills the requirement of Section 9613(1)(iv).
The Estate's claim that Wells Fargo's accounting reference is inadequate because it does not state a charge for an accounting is unsubstantiated, as no evidence is presented that such a charge exists or that it was required to be listed at zero. The Notice also explains the liability for deficiency, stating that the vehicle was repossessed due to the debtor's default on the contract, thereby satisfying Section 9614(1)(ii). Overall, Wells Fargo's Notices conform to legal requirements, and the Estate's objections lack merit.
Section 9614(1)(iii) mandates that notices include a telephone number for obtaining the amount owed to redeem collateral. Wells Fargo complies by providing the number on the Notice's first page, stating that full payment is required to retrieve the property. Section 9614(1)(iv) requires a telephone number or mailing address for additional information, which Wells Fargo also includes, making it clear that inquiries can be directed to the same number or a specified mailing address. The Notice's repetition of the phone number ensures consumers know where to seek information.
The January 4, 2013 Notice, which informs the debtor of a rescheduled sale date, does not violate section 9614. The preceding November 30, 2012 Notice includes detailed disclosures and contract information. The Estate contends that both Notices are deficient and argue that this deficiency affects the commercial reasonableness of the sale under section 9610, which requires that all aspects of collateral disposition be commercially reasonable, including notice.
Additionally, the Estate raises concerns about Wells Fargo's January 4, 2013 Notice, arguing its failure to address the minimum bid price from the earlier Notice rendered the sale unreasonable. Wells Fargo defends this omission by citing its inability to sell the vehicle on January 3, 2013. The determination of commercial reasonableness for the January 22, 2013 sale is left to a jury. Article 9 allows secured creditors to send revised notices, provided they act in good faith and the revised notice is reasonable and commercially justified.
Wells Fargo notified Patricia McDonald in a November 30, 2012, letter of a public sale for her vehicle, setting a minimum bid of $9,157.00. A subsequent notice on January 4, 2013, indicated an unsuccessful sale attempt on January 3, 2013, and scheduled another sale for January 22, 2013. The January notice was significantly shorter and lacked a reiteration of the minimum bid, potentially leading a reasonable recipient to believe only the sale date had changed. This omission could result in a jury finding that Wells Fargo did not adequately address all relevant information, raising questions about the commercial reasonableness of the notices.
Additionally, the Estate contended that Wells Fargo's failure to comply with the Motor Vehicle Sales Finance Act (MVSFA) rendered the repossession and sale commercially unreasonable under section 9610. It argued that the notices did not include required disclosures, such as the buyer’s reinstatement rights, storage location, and information about personal property left in the vehicle. The MVSFA, effective during the events in question, mandates adequate notice for debtors and prohibits self-help repossession under certain conditions. Despite the MVSFA's repeal in 2014, its provisions applicable to the 2012-2013 period govern this case. Although a private right of action does not exist under the MVSFA, the Estate seeks to demonstrate compliance failures through section 9610, which mandates that all aspects of collateral disposition must be commercially reasonable.
Notice to the buyer must include the right to reinstate the contract if the holder allows it, an itemized statement of the total amount needed to redeem the motor vehicle, and the holder's intent to re-sell the vehicle within 15 days of the notice date. Additionally, it must disclose where the vehicle is stored and provide the name and address of the payment recipient. The notice must inform the buyer that any personal property in the repossessed vehicle will be held for 30 days from the notice's mailing, after which it may be disposed of like the vehicle. The Estate claims that Wells Fargo's notices violated these requirements by failing to adequately inform the buyer about reinstatement rights, vehicle storage location, and the holding period for personal property. Wells Fargo defends itself by stating that the MVSFA is a regulatory statute without a private cause of action and that there is no evidence of personal property being left in the vehicle. It also argues that there was no right to reinstate the contract. The court found that the Estate provided sufficient evidence to proceed to a jury regarding Wells Fargo's violations of the MVSFA, specifically that the notices did not detail the storage location of the vehicle or inform the buyer about reclaiming personal property. Although one notice mentioned the possibility of reinstatement by a specific date, Wells Fargo contended that all payments were overdue and no future payments were due. The court did not resolve the question of liability as a matter of law.
The statement asserts that if it is true that "there was nothing to reinstate," the November 30, 2012 Notice's reinstatement language could be misleading. Wells Fargo may argue that the Estate did not prove Patricia McDonald had property in the vehicle at the time of repossession, which could influence a jury's assessment of commercial reasonableness and actual damages. Despite this, the Estate has established an injury sufficient for Article III standing, while the determination of whether this injury is compensable and its extent falls to the jury.
Wells Fargo's argument centers on whether a debtor existed at the time of repossession, suggesting no debtor could recover damages since Patricia McDonald had died and no estate was established. The Estate counters that Richard McDonald, as Patricia's husband, became the debtor under the Contract, a point supported by Pennsylvania law regarding intestate succession. However, the absence of Patricia McDonald's Will in the record complicates matters. The court expresses skepticism towards Wells Fargo's interpretation of Article 9, suggesting it would not allow secured creditors to violate repossession laws without consequence until an estate is opened.
The court concludes that at least one debtor existed when Wells Fargo repossessed the GMC Sierra, citing Pennsylvania statutes that protect liens on a decedent's estate. Additionally, Wells Fargo's liability under section 9628 is contingent on its knowledge of the debtor's identity and how to communicate with them.
Wells Fargo contends that it was unaware of the identities of Rick McDonald and Richard McDonald as debtors, asserting that this lack of knowledge prevents establishing liability under estate law. The determination of Wells Fargo's knowledge regarding the debtor's identity is deemed a factual dispute unsuitable for resolution at the summary judgment stage. Consequently, a jury is required to evaluate the conflicting narratives regarding Wells Fargo's awareness of the situation, especially in light of Rick McDonald's alleged misrepresentations and whether a public database could have alerted Wells Fargo to Patricia McDonald's death.
The court grants summary judgment to Wells Fargo regarding the Estate's claims under section 9616 related to the January 27, 2013 deficiency Notice. The Estate's assertions of actual damages due to Wells Fargo's purported failures to explain the surplus or deficiency calculations and to provide contact information are found to be unsubstantiated. The court confirms that Wells Fargo's deficiency Notice complies with section 9616 by detailing:
1. The total obligations secured.
2. The gross proceeds from the disposition.
3. The aggregate obligations after deducting these proceeds.
4. A breakdown of related expenses, including repossession and attorney fees.
5. Any credits to which the obligor is entitled.
6. The total deficiency amount.
The Notice includes clear language reflecting these requirements, thereby meeting the statutory obligations under section 9616.
Wells Fargo's breakdown adheres to section 9616 requirements for explanations, despite the Estate's claim that the January 27, 2013 Notice lacked a contact number for additional information. The Estate acknowledges the presence of a telephone number but argues it was only for payment purposes, ignoring that the Notice explicitly states the number can also be used for inquiries. The Notice lists the same number twice, once for payment arrangements and again for inquiries, fulfilling the requirement to provide a contact number or address for further information.
Regarding the Estate's conversion claim, both parties seek summary judgment. The Estate contends that Wells Fargo's actions violated the Motor Vehicle Sales Finance Act (MVSFA) and Article 9, constituting conversion. Wells Fargo counters that the claim is barred by the statute of limitations and the gist of the action doctrine, asserting it had the right to repossess the vehicle due to default. Wells Fargo claims the Estate's lawsuit, filed three years after the vehicle was repossessed, is untimely under Pennsylvania's two-year statute of limitations. The Estate argues that the statute of limitations should run from when the administrator was granted, not when the vehicle was taken. The Court of Appeals concluded that the Estate's conversion claim is not time-barred, allowing the Estate to maintain its action against Wells Fargo under Pennsylvania law.
McDonald’s lack of appointment as administratrix of Patricia McDonald’s estate until years after the vehicle sale does not alter the court's conclusion. The Pennsylvania Supreme Court established that a cause of action requires a capable party, and the statute of limitations begins with the grant of administration. Wells Fargo contends the conversion claim should be time-barred due to reliance on outdated authority, specifically the case Riner v. Riner, which predates the Probate Code. They reference 20 Pa.C.S.A. § 3376, asserting it extends statutes of limitations for debts or liabilities owed to an estate for one year post-death, irrespective of delays in securing letters of administration. However, the court distinguishes between "debt or liability" and "unliquidated conversion claims," as supported by the Pennsylvania Superior Court's ruling in Prevish v. Northwest Medical Center. The court in Prevish clarified that unliquidated personal injury tort claims do not qualify as debts or liabilities under § 3376. The specific language of "debt or liability" implies a narrower scope and does not encompass general causes of action. Consequently, § 3376 does not extend the statute of limitations for the Estate's conversion claim. Furthermore, Pennsylvania law dictates that personal injury tort claims remain unliquidated until settled or awarded a specific amount. Despite Wells Fargo's argument that the conversion claim pertains to specific property with ascertainable value, it remains unliquidated. Thus, the statute of limitations commenced with the grant of administration, rendering the conversion claim timely. Lastly, Wells Fargo's assertion that the conversion claim is merely a breach of contract disguised as a tort, and therefore barred by the gist of the action doctrine, is rejected by the court.
The gist of the action doctrine in Pennsylvania prohibits tort claims that arise solely from a contractual relationship, particularly when the duties breached are based on the contract, any liability stems from the contract, or the tort claim duplicates the breach of contract claim. However, the Estate's conversion claim is not barred by this doctrine because it is rooted in Wells Fargo's alleged violations of the Motor Vehicle Sales Finance Act (MVSFA) and the Commercial Code, rather than a breach of contract. Under Pennsylvania law, conversion involves depriving someone of property without consent or legal justification. The MVSFA specifies requirements for repossession notices, and failure to comply can support a conversion claim.
The Estate has shown that Wells Fargo lacked lawful justification for the vehicle's disposal due to defects in the repossession notices, which did not disclose storage locations or inform the buyer about the retention of personal property. However, the Estate must also prove that it did not consent to the repossession, which remains a material question of fact. The presence of Rick McDonald during the repossession raises questions about whether he consented, necessitating a jury's determination on this issue.
Additionally, the Estate's motion for class certification is denied. The Estate seeks actual and statutory damages under section 9610 for allegedly commercially unreasonable repossession and sale of the vehicle, as well as compensatory damages for conversion. Testimony from Liane McDonald indicates her role as administratrix of the Estate and her limited familiarity with the contract. Verifications for class counsel have been provided.
The Estate initially aimed to certify a class of Pennsylvania residents who received repossession and disposition notices from Wells Fargo that misrepresented Pennsylvania statutory requirements. Wells Fargo challenged this by asserting the proposed class was an unascertainable "fail-safe" class, leading the Estate to propose a revised class definition. The new class includes individuals who entered into retail installment contracts for motor vehicles secured by Wells Fargo, had their vehicles repossessed in Pennsylvania within six years prior to the lawsuit, and received notices that contained specific inaccuracies regarding the sale of repossessed vehicles or the borrowers' rights.
Wells Fargo opposed this modified class certification and provided a declaration from John Sonner, a manager at Wells Fargo Auto, stating that the company does not maintain historical residency data for customers. Wells Fargo can only identify current residency at the time of document queries and cannot ascertain past residency if an address has changed. Sonner noted that to determine where a customer lived during repossession, Wells Fargo would need to retrieve repossession notices. A query conducted for borrowers with last-known Pennsylvania addresses who had vehicles repossessed between January 25, 2010, and January 25, 2016, identified 11,741 unique accounts, of which 327 potential class members received differing repossession notices compared to one specific account, that of Patricia McDonald.
Mr. Sonner testified that only 200 out of 11,741 unique accounts, including Patricia McDonald's, are identified as originating in Ohio. The discrepancy suggests that 200 accounts with last-known addresses in Pennsylvania received Ohio notices, while the remaining 127 received notices from states other than Pennsylvania or Ohio. Currently, there is no evidence concerning notices from other states. The Estate's counsel indicated intentions to examine notices sent to 327 Wells Fargo customers from Pennsylvania who received non-Pennsylvania notices to determine class membership during discovery.
In reviewing a motion for class certification, the court acts as a fiduciary for absent class members and must ensure compliance with Federal Rule of Civil Procedure 23. The Estate must demonstrate that the class is readily ascertainable based on objective criteria, and it must satisfy Rule 23(a) requirements, including numerosity, commonality, typicality, and adequacy of representation. Additionally, under Rule 23(b)(3), the Estate must show that common questions predominate over individual ones and that class resolution is superior to other methods.
A rigorous analysis of the evidence at the class certification stage is necessary, and the court found insufficient grounds to certify the proposed class due to a lack of typicality, predominance, or superiority. Class ascertainability is crucial, necessitating that the class be defined by objective criteria and that there is a reliable, administratively feasible mechanism for identifying class members without extensive individual inquiry. The court emphasized that mere assurances of compliance with Rule 23 are inadequate without evidentiary support, and the identification process must be manageable. The analysis of objective criteria for class definition will be the first step in this determination.
The analysis focuses on the Estate's proposed class certification mechanism, specifically its ability to (1) identify class members and (2) demonstrate administrative feasibility. The class is defined using objective criteria, which the Estate has sufficiently established concerning its Commercial Code and conversion claims. For the Article 9 claim, the objective nature of the Notices' compliance with MVSFA requirements is highlighted. Despite the MVSFA's repeal on December 1, 2014, the Estate seeks to certify a class for individuals who received notices before and after this date, asserting the claim under section 9610 rather than the MVSFA.
The conversion claim is considered timely, as the Estate filed within two years of opening the Estate. However, individuals without an active estate must adhere to Pennsylvania's two-year statute of limitations, meaning only those who had their vehicles repossessed on or after January 25, 2014, qualify. If a class is certified, conversion plaintiffs will be treated as a distinct subclass.
The Estate has not initially proposed a mechanism for ascertainability in its class certification motion. Wells Fargo contends that identifying class members is unfeasible without performing extensive account reviews, which would require individualized inquiries. Although the Estate later suggested a method during a hearing, concerns arose regarding the timing and the adequacy of this proposal in meeting the rigorous analysis required for class certification. The court recognizes the need to evaluate the Estate's proposed mechanism's effectiveness in reliably and feasibly determining class membership, referencing precedent from the Court of Appeals regarding ascertainability standards.
Plaintiff sued BMW for violating consumer laws by selling run-flat tires, seeking to certify a class of all current and former owners and lessees of specific BMW vehicles equipped with these tires in New Jersey. The Court of Appeals raised concerns about the ascertainability of the class, noting BMW's inability to identify vehicles with Bridgestone run-flat tires or confirm if their tires had gone flat and been replaced, as required by the class definition. The court remanded the case, instructing the district court to determine if BMW's records could ascertain class members or if an alternative method existed.
Similar remands occurred in Hayes v. Wal-Mart Stores, Inc. and Carerra v. Bayer Corp., where the absence of relevant records hindered class membership ascertainability. In contrast, in Byrd v. Aaron's, Inc., the court found objective records could identify class members, as Aaron's records listed computers affected by spyware. The court clarified that ascertainability does not pertain to class definition inclusivity but rather to the ability to identify members through records. Additionally, in City Select Auto Sales Inc. v. BMW Bank of North America, the court acknowledged that corporate records could support ascertainability when a plaintiff sought to certify a class based on unsolicited faxes sent to dealerships, with specific records available for identification.
Magistrate Judge Schneider denied the plaintiff's request to compel the production of the Creditsmarts database during discovery. The district court determined that even if the database had been produced, it could not be used to ascertain which customers received faxes, as the presence of a fax number alone was insufficient proof of receipt. Consequently, the court denied class certification due to the database's over-inclusiveness. The Court of Appeals reversed this decision, clarifying that at the class certification stage, plaintiffs are not required to conclusively prove class membership with a single record. The database was deemed to define a limited set of potential claimants, necessitating only the verification of whether a specific dealership received the BMW fax on relevant dates.
The Court of Appeals categorized its decisions on ascertainability into two groups: one where objective records failed to identify potential class members, and another where such records or affidavits successfully did so. This case fell into the latter category, highlighting the importance of ascertainability in the requisite choice-of-law analysis. Pennsylvania law governs potential plaintiffs if they resided in Pennsylvania at the time of car repossession, as it has a vested interest in consumer protection for its residents.
Wells Fargo's declarant, Mr. Sonner, affirmed that the bank's records could identify debtors eligible for Commercial Code or conversion claims. He conducted a query revealing 200 accounts with loans from Ohio and last-known Pennsylvania addresses. However, he cautioned that last-known addresses might not reflect the customers' residences at repossession. Nevertheless, Wells Fargo can ascertain the state of residence through an account-by-account review. This review allows for the identification of customers who received insufficient notices regarding repossession and those who had their cars repossessed during specific timeframes. Ultimately, the Wells Fargo database requires individual inquiries to confirm customers' state of residence at repossession, similar to the database issues identified in the City Select case.
A key factual inquiry in this case is determining the residence of customers who received non-Pennsylvania notices at the time of repossession. Wells Fargo's records can facilitate this through an account-by-account review, which is deemed a suitable mechanism for identifying potential class members despite concerns of over-inclusivity. The reliability and administrative feasibility of this mechanism are critical. Previous rulings, including those in Byrd and City Select, affirm that while individual inquiries to verify class membership may be necessary, they do not inherently preclude class certification. The courts have recognized that over-inclusivity is a relevant factor in assessing feasibility, but a method must exist to identify actual class members, such as through affidavits. The review indicates that the Wells Fargo database has a manageable number of 327 customers whose records need assessment, aligning with the Court of Appeals’ guidance that the need for some records review does not bar certification. Thus, the proposed mechanism is confirmed to be reliable and administratively feasible.
Disallowing the Estate's proposed inquiry into Wells Fargo's records would hinder the certification of any Rule 23(b)(3) class. While some records may indicate that certain customers did not have their cars repossessed in Pennsylvania, minor over-inclusiveness does not undermine the ascertainability method. There is no need for plaintiffs to submit affidavits regarding repossession, as Wells Fargo's records can provide the necessary information. The proposed class resembles one related to the Fair Debt Collection Practices Act, which was deemed ascertainable, and differs from unascertainable classes due to a simpler definition and record-searching process. The Estate's mechanism for identifying class members is viewed as reliable and administratively feasible.
The Estate fulfills all Rule 23(a) requirements except for typicality.
1. **Numerosity**: The Estate meets this requirement, with a potential class size of 327, exceeding the general threshold of 40 members.
2. **Commonality**: The Estate also satisfies commonality, as the claims of class members share significant legal and factual questions regarding notices that failed to adhere to minimum bid and MVSFA requirements.
3. **Typicality**: Evaluation of typicality focuses on the alignment of claims among class members. Although Wells Fargo argues that the Estate's claims differ due to defenses applicable to some members, the Estate has adjusted its class definition to include only Pennsylvania residents who received non-Pennsylvania notices. Thus, the typicality requirement is likely met despite Wells Fargo's concerns about potential variations in notices received.
Wells Fargo contends that the Estate faces several defenses, including: (1) applicability of Ohio law to the transaction, (2) Patricia McDonald’s inability to reinstate the contract post-default, (3) the conversion claim being constrained by statute of limitations, and (4) the Estate's inability to recover under the Commercial Code due to the lack of an identifiable debtor when Wells Fargo allegedly failed to comply with the Code. The court previously addressed the choice of law defense and determined that the reinstatement question is factual and not atypical for the Estate. While the statute of limitations could impact recovery rights, it does not alter the liability discussion.
Typicality, which assesses whether the Estate's interests align with class members' and whether their claims arise from the same facts, is met in this case. The court found Wells Fargo's assertion of immunity under section 9625 unconvincing, as the lack of an Estate prior to repossession does not exempt it from liability. However, section 9628 presents a more compelling defense for Wells Fargo, asserting that it cannot be liable without knowledge of the debtor's identity and means of communication. Wells Fargo claims it sent notices to Patricia McDonald after her death, and payments were made without clear communication from Rick McDonald, who misrepresented his mother’s status. This defense has been a focal point in litigation and is unique to the McDonald situation, as the borrower's death occurred before default.
The Estate has not demonstrated that this defense applies to other class members, and Wells Fargo has presented substantial fact-based defenses related to the unique circumstances of the deceased debtor, payment handling, and communication issues. The court noted that while this does not negate the possibility of class certification, the Estate has not sufficiently countered Wells Fargo's strong defenses which appear atypical for debtors.
Regarding class representation adequacy, the court must ensure that the representative party protects class interests. Wells Fargo argues that the Estate has not fulfilled this requirement, but the court disagrees, indicating satisfaction of the adequacy criteria related to class counsel's experience and the representative plaintiffs' interests.
The adequacy of the Estate's counsel to represent the class is assessed based on several factors outlined in Rule 23(g). Key considerations include:
1. **Work Done**: Counsel has been involved since 2016, effectively obtaining remand of a prior dismissal, countering summary judgment motions, and moving for class certification. Their preparedness and arguments during a March 2019 hearing were strong. However, the lack of depositions of Wells Fargo representatives and a motion to strike a declaration were noted, though these actions may have been strategic given the case's focus.
2. **Experience**: The experience of Attorneys Robleto, Kuruce, and Fabian in class actions is unclear. They cited limited prior class action work without detailing outcomes, and there were errors in Fabian's verification regarding his experience.
3. **Knowledge of Law**: Counsel's understanding of the ascertainability requirement appears insufficient, as they did not address it adequately in their motion or reply, despite Robleto’s preparedness at the March hearing.
4. **Resources Committed**: The resource commitment of the counsel supports class certification, as they have actively defended depositions and pursued certification since initiating the suit.
Overall, while some factors are indeterminate, the work done by counsel in identifying claims is the most compelling, leading to the conclusion that the Estate's counsel is adequate for representing the class of 327 members. Additionally, there are no disqualifying conflicts of interest, although Wells Fargo questions Liane McDonald’s knowledge to represent the class.
Wells Fargo contends that Liane McDonald lacks adequate knowledge of the installment contract, relies on her husband Rick for managing the lawsuit, provided evasive responses during discovery, and is unaware of a prior judgment against her. Additionally, Wells Fargo claims that fraud undermines the Estate's capacity to represent the class, asserting that Rick functions as the de facto lead plaintiff while Liane is only nominally the lead. They further argue that Liane's role as administratrix creates a conflict of interest that renders her inadequate.
In response, it is determined that Liane McDonald possesses the necessary knowledge to represent the class. A class representative only needs a minimal understanding to meet the adequacy standard, which includes knowledge of the case, interest in the litigation, and willingness to engage in the process. Liane McDonald competently answered questions during her deposition, demonstrated an understanding of her duties, and expressed her intent to help her family as administratrix of Patricia's estate. Her testimony met the necessary knowledge threshold.
Wells Fargo's arguments regarding fraud are not substantiated, as Liane's involvement and understanding of the case are deemed sufficient for her role. The only claims of dishonesty relate to a miscommunication regarding attorney representation, which does not implicate Liane directly in fraud. Lastly, while Wells Fargo raises concerns about a potential conflict of interest due to Liane's dual representation of the Estate and the class, the inquiry into adequacy aims to identify significant conflicts, which are not present in this case.
A fundamental conflict arises when some class members allege harm from conduct that benefits others. However, a conflict deemed "unduly speculative" does not constitute a fundamental conflict. In cases where a class representative dies during litigation, courts typically allow an estate representative to substitute for the decedent. Wells Fargo has not demonstrated a fundamental conflict concerning Liane McDonald as administratrix of the Estate, instead suggesting a speculative conflict regarding her dual responsibilities to protect the Estate's interests and those of the class plaintiffs. This type of conflict is common in class actions, and Wells Fargo has not provided evidence that the Estate is rushing to settle in a way that harms the class.
The Estate also fails to satisfy the requirements for class certification under Rule 23(b)(3), specifically the predominance and superiority standards. Predominance assesses whether the class is cohesive enough for representation, with a higher threshold than the commonality requirement under Rule 23(a). If proving essential elements of the cause of action necessitates individual treatment, class certification is inappropriate. Although calculations of individual damages do not automatically preclude certification, cases where damages are central to the issues may hinder class action viability. Summary judgment has been granted to Wells Fargo on most of the Estate's claims, except for two: a claim under section 9610 regarding the repossession of a GMC Sierra as commercially unreasonable and a conversion claim.
The analysis of predominance for section 9610 necessitates consideration of section 9611, as both are invoked in the Estate's complaint. Section 9610 pertains to the disposition of collateral after default and mandates that such disposals be commercially reasonable. Conversely, section 9611 addresses the requirement for reasonable notification prior to collateral disposition, differentiating it from the commercially reasonable standard. The distinction between these sections is recognized in Article 9's damages provision, emphasizing that secured parties must act in good faith and commercially reasonable manners when enforcing security interests.
The Commercial Code outlines that certain dispositions must be "commercially reasonable," and the Estate has not demonstrated a violation of this standard. The Estate is permitted to pursue claims under the MVSFA, focusing on whether the minimum bid failure results in a commercially unreasonable disposition (section 9610) or unreasonable notification (section 9611). Both inquiries are fact-intensive, requiring a totality of the circumstances assessment. Pennsylvania courts evaluate commercial reasonableness through three criteria: good faith, avoidance of loss, and effective realization. A lower sale price does not automatically indicate a lack of commercial reasonableness, and technical violations of the MVSFA do not inherently render a disposition unreasonable.
The complexity of these evaluations precludes class action treatment, as each case requires individual scrutiny of circumstances—potentially involving up to 327 different scenarios regarding notification and commercial reasonableness. The criteria for reasonable notification per section 9611 must be met, but failure to include MVSFA specifics does not inherently make a notice unreasonable. The determination of notification reasonableness remains a factual issue for a jury, which may vary across plaintiffs. An example cited is Hudson v. Eaglemark Savings Bank, where a claim regarding untimely notice was dismissed due to lack of supporting facts.
A notification that omits details about property in a car may still be deemed reasonable if the plaintiff had no property in that vehicle. Under Pennsylvania law, determining whether Wells Fargo converted debtors' property necessitates individualized assessments, as conversion is defined by two elements: deprivation of property rights without the owner's consent and without lawful justification. The consent aspect cannot be generalized across a class, necessitating individual inquiries. Conversion claims cannot be based on the same facts as a breach of contract claim. Although a breach of contract claim was dismissed, the Estate's conversion claim was permitted because a violation of the Motor Vehicle Sales Finance Act (MVSFA) could negate Wells Fargo's lawful justification for interfering with the Estate's property. It is crucial to establish individual consent for repossession despite the contract's terms.
Additionally, determining damages for conversion relies on the market value of the converted property at the time of conversion, requiring the jury to assess the value of up to 327 vehicles, which introduces further individualized inquiries. The superiority of class action is evaluated against alternative adjudication methods, and the same individualized issues that hinder predominance also affect superiority. Therefore, the motion for class certification regarding the remaining Article 9 and conversion claims is denied. A group of eight Pennsylvania citizens sought to intervene in the case, citing concerns over the Estate’s counsel's diligence, potential lack of standing, and issues regarding typicality, commonality, and choice of law that could undermine certification.
Intervenors, whose interests are currently protected during the class certification motion, seek intervention, claiming their counsel is better equipped to handle the case. They challenge allegedly excessive fees charged by third parties for vehicle redemption, reinstatement of retail installment loans, and notice adequacy regarding personal possessions. The existing Plaintiff, the Estate, has raised similar claims but has not contested the third-party fee assessments. The Intervenors also wish to challenge Wells Fargo's notices, which differ for loans originated in Pennsylvania versus Ohio; however, these allegations are not currently under consideration.
To permit mandatory intervention under Federal Rule of Civil Procedure 24, several criteria must be met: a timely application, sufficient interest from the intervenor, potential impairment of that interest by the case's outcome, and inadequate representation by the existing Plaintiff. The Intervenors’ notice claims are deemed adequately protected by the Estate, and class certification for these claims cannot be granted due to predominance of the issues under section 9610, which impedes the effectiveness of a class action. The Intervenors’ claims regarding third-party fees differ significantly from the Estate's amended complaint, representing new theories of liability and damages.
Although the Intervenors may file individual claims, with the statute of limitations tolled since the class action's initiation in 2016, the court echoes the district court's finding in Lindblom v. Santander Consumer USA, Inc., noting the Intervenors primarily seek to preserve their ability to file a class action. The court indicates a lack of authority to toll the statute of limitations for a subsequent class action, as affirmed by a recent Supreme Court ruling.
The Supreme Court's 2018 ruling in *China Agritech, Inc. v. Resh* established that while the American Pipe doctrine tolls the statute of limitations during a putative class action, it does not permit a follow-on class action after the limitations period has expired. Timely claims by Intervenors can proceed as individual claims; however, they cannot join the existing case filed in 2016. The court emphasized that allowing individual interventions would unduly delay the trial set for June 25, 2019, due to the need for document production and depositions from each Intervenor. The court rejected the Intervenors' challenges regarding class counsel and certification, stating the lack of predominance and superiority for a class resolution due to the varied claims involved. The Estate's claims under section 9610 of Article 9 of the Pennsylvania Commercial Code were found to have genuine issues of material fact, preventing summary judgment for those claims. However, other claims were dismissed due to insufficient factual issues. The court determined that the individual issues related to reasonableness and consent in conversion cases outweighed the common issues, rendering class action inappropriate. Consequently, the Estate's motion for class certification and the Intervenors' motion to intervene were both denied. The excerpt also references Rick McDonald’s professional background and personal circumstances following his resignation from World Health Alternatives, which are largely incidental to the legal analysis.
Patricia McDonald believed it would be prudent to purchase a truck in her name, considering the potential risks associated with the author's future. The payment due date for the loan was changed on October 4, 2008, from the 26th to the 6th of the month, adjusting the contract's maturity date to November 6, 2012. In the event of default solely due to late payments, the lender could demand full payment only if the default continued for at least 30 days. A late charge of either $20 or 5% of the overdue payment would apply if payment was not received within 10 days of the due date.
The Estate disputes certain characterizations of Rick McDonald’s communications with Wells Fargo regarding Patricia’s health, which he reported as being serious and affecting her ability to make payments from 2010 to 2012. Records indicate that the account had been delinquent since May 2007 and was continuously in default from August 6, 2012, leading to the repossession of the GMC Sierra on November 28, 2012, while the loan was in default. Although Patricia could have redeemed the vehicle by paying the outstanding debt, the loan had fully matured by the time of repossession, indicating no reinstatement option was available.
Wells Fargo contended that Ohio law governs Liane McDonald's statutory claims, asserting that the Estate could only pursue its claims under Pennsylvania law. They argued for dismissal based on a two-year statute of limitations for the conversion claim, the "gist of the action" doctrine, and compliance with the contract during the repossession of the Sierra vehicle. The court denied Wells Fargo's motion to dismiss, determining that the Estate sufficiently alleged the applicability of Pennsylvania law to its statutory and conversion claims, but noted the issue could be revisited during summary judgment. The court emphasized that discovery could yield relevant information about the parties' contacts and relationships. The Estate's claims under the Commercial Code and for conversion were deemed to meet the plausibility standard for survival under Rule 12(b)(6). A two-phase discovery process was established: the first phase focused on motions for class certification and summary judgment regarding the Estate's individual claims, while a second phase, if necessary, would prepare for trial. The document references various motions and briefs related to summary judgment from both parties and highlights that Ohio law does not permit survival actions, reflecting its interest in safeguarding local businesses.
A state's interest in protecting the freedom of sophisticated business parties to enter into contracts without judicial alteration is highlighted, referencing the case Pac. Emp'r Ins. Co. v. Glob. Reinsurance Corp. of Am. Wells Fargo Bank, N.A., identified as a citizen of South Dakota for diversity jurisdiction, is also noted. The excerpt emphasizes the application of Pennsylvania law to the Estate's conversion claim, asserting that the injury occurred in Pennsylvania, which has a greater interest in the case. Testimony indicates that while additional documents were signed and mailed from Pennsylvania to an Ohio dealership, the McDonalds remained in Pennsylvania throughout the purchasing process, reinforcing Pennsylvania's jurisdiction. The Pennsylvania Commercial Code's definition of "consumer-goods transaction" is cited, confirming that the transaction involved personal obligations and security interests in consumer goods. The specific requirements for notification under the Commercial Code are mentioned, indicating that no particular phrasing is mandated for compliance.
The excerpt references the Pennsylvania Motor Vehicle Sales Finance Act (MVSFA) and its codification in the Pennsylvania Consolidated Statutes, specifically noting that the protections under the MVSFA are mirrored in 12 Pa.C.S.A. 6201 et seq. The parties acknowledge the necessity to apply the version of the MVSFA that was in effect at the time of the repossession and disposition of the vehicle in question, a GMC Sierra. It is emphasized that the MVSFA does not provide a private cause of action for violations, as supported by several case citations. The excerpt includes references to specific sections of the Pennsylvania Consolidated Statutes (such as 13 Pa.C.S.A. 9610(b) and 9616) and discusses the implications of these statutes in the context of class definitions in legal claims, particularly the concept of a "fail-safe" class, which is deemed improper due to its dependency on the outcome of a claim. The text incorporates various legal precedents to support its interpretations and conclusions.
During the March 18, 2019 hearing, the Estate's counsel suggested a potential class size of at least 211 debtors, which appears to be a hypothetical figure rather than a derived minimum from Mr. Sonner's declaration. The document references various case law to establish the requirements for class certification under Federal Rules of Civil Procedure 23(a) and 23(b)(3). It indicates that plaintiffs have failed to provide adequate analysis or methodology to demonstrate that all putative class members experienced similar wage deductions, instead relying on unsupported assertions that do not meet the rigorous standards necessary for class certification. The plaintiff has not proposed a mechanism for identifying class members nor adequately addressed the defendant's arguments regarding ascertainability. Consequently, the court emphasizes that the burden lies with the plaintiffs to establish ascertainability, suggesting that the proposed nationwide class may not be certified due to these deficiencies. Additionally, the time frame for filing an action for conversion is stipulated under 42 Pa.C.S.A. § 5524(3), requiring actions to be commenced within two years of the taking or injury.
The excerpt addresses the legal standard of ascertainability in class action lawsuits, emphasizing that plaintiffs must demonstrate the ability to identify class members but not necessarily provide full identification at the certification stage. Various case citations illustrate the evolving jurisprudence around ascertainability, including key rulings from the Third Circuit, such as *Grandalski v. Quest Diagnostics Inc.*, which differentiates between ascertainability and predominance requirements. The excerpt also references *Comcast Corp. v. Behrend*, reinforcing that ascertainability must respect constitutional limitations regarding choice of law in nationwide class actions, as outlined in *Phillips Petroleum Co. v. Shutts* and *Georgine v. Amchem Prod. Inc.*. The document acknowledges that while corporate records can aid in identifying class members, affidavits may enhance reliability. Additional cases, such as *Gibbons v. Weltman, Weinberg, Reis Co. LPA*, illustrate successful class certifications based on identifiable characteristics within specific timeframes and geographic areas. The summary highlights the necessity for an individualized choice of law analysis for each plaintiff in a class action context, underscoring the complexity and specificity required in establishing class certification.
The document references multiple legal cases and statutes relevant to class action certification and procedural standards. Key points include:
1. **Legal Precedents**: Citations to various cases such as Stewart v. Abraham, McDonough v. Toys R Us, and Dewey v. Volkswagen highlight the legal standards and rulings associated with class action certification, particularly focusing on predominance and ascertainability.
2. **Class Certification Issues**: The discussion emphasizes that while a class was not certified due to lack of predominance, the court noted that objectors could still be heard if a class were certified and subsequently settled. The distinction between the predominance inquiry and the ascertainability requirement is clarified.
3. **Legal Research and Discovery**: An attorney's efforts in conducting legal research and managing discovery are outlined, including propounding requests and analyzing results, which are essential for the class certification process.
4. **Statutory References**: The Estate's claims invoke specific sections of the Pennsylvania Uniform Commercial Code (13 Pa.C.S.A. § 9610 and § 9611), although only § 9610 is cited in the complaint.
5. **Critical Analysis**: The excerpt indicates that damages must be measurable across the class, referencing a Supreme Court ruling, while noting that the Court of Appeals has interpreted this requirement specifically in the context of antitrust claims.
Overall, the document provides a detailed examination of class action certification criteria, procedural considerations, and the legal framework governing such actions within the relevant jurisdiction.
The excerpt addresses various legal precedents and statutes related to commercial reasonableness and violations of the Motor Vehicle Sales Finance Act (MVSFA). It highlights that the determination of commercial reasonableness is often case-specific. Judge Schiller certified a settlement class under the Pennsylvania Commercial Code and noted that a technical violation of the MVSFA does not automatically lead to unreasonable notice. Specifically, the failure to notify a plaintiff of their right to reinstate a contract was deemed not unreasonable. The text references multiple cases, including those that established the principle of consent in repossession scenarios, such as a plaintiff texting the repossession agent to retrieve a vehicle. Additionally, it mentions procedural aspects of class actions and intervention, citing relevant federal rules and cases. The excerpt concludes with a mention of a trial expected to occur before mid-summer 2019, indicating potential changes to the trial date.
